Fed's Lockhart sees little near-term impact from Brexit, but argues for patience

It would be best for the US central bank to excercise patience and wait until matters were clearer before acting on monetary policy following the UK's decision to leave the European Union, a top official from the Federal Reserve said.

In a speech delivered on Thursday, and posted to the Federal Reserve Bank of Atlanta's website, president Dennis Lockhart said that since Brexit, "domestic demand appears to be holding up well".

Nevertheless, he also said that: "While growth seems to have accelerated in the second quarter compared to the first, the incoming data overall have been mixed.

"I have no basis—statistical or anecdotal—for assuming any significant change in economic momentum since June 23," he added, while pointing out that recent data releases mostly covered periods before June 23.

"It's too early to sound the "all clear" as regards financial market stability. Fed and other policymakers will need to stay on alert for signs of instability severe enough to pose a threat to the broad economy. So far, the financial market turbulence we’ve seen does not seem to have caused direct harm to the country’s economy. As many have stated, it is not a "Lehman moment"," Lockhart said.

Over a short time horizon, he believed the impact from Brexit on the US economy - either through a stronger dollar or its effect on the country's trade with Europe and the euro area - would be limited.

However, the heightened uncertainty resulting from the vote might "amount to a persistent economic headwind" over time.

"Taking a long view, policy-making may have to adapt to an altered environment.

"For now, I don’t believe the FOMC is behind the curve in the setting of the policy rate. For that reason, I'm comfortable with a cautious and patient approach to policy in the near term."